Wealth Check: 'How can I save money for my son's university fees?'

Gina Musa works as a parent partnership co-ordinator for a local authority, giving support and information on education to parents of children with special needs.

Gina Musa works as a parent partnership co-ordinator for a local authority, giving support and information on education to parents of children with special needs.

Her son will be sitting GCSEs next year and wants to go to a performing arts school and possibly on to further education. Ms Musa wants to know how to invest the money from her maturing savings plan over the next three to four years, so it can go towards her son's college costs, and what she should do with her Barclays shares.

She also wants to know whether to move her pension monies into the local government schemes. She hopes to work in an area closer to her outside interests once her son is at college and would consider moving to a smaller property to finance this.

GINA MUSA, 48, PARENT PARTNERSHIP CO-ORDINATOR

Education: Teacher training; diploma in counselling

Salary: £25,000

Debt: Credit card paid off each month

Property: Five-year fixed mortgage at 5.59 per cent

Savings: Cash Isa (about £4,000). Savings policy of about £7,500 that matures in June; 111 Barclays shares.

Pension: Local government pension scheme since 1999. Pension from teaching and private pension.

Outgoings: Standing orders, about £800 a month; others, about £600 a month

We put her case to Patrick Connolly at John Scott & Partners, Vivienne Starkey at Equal Partners and Caroline Anstee of Fiona Price.

SAVINGS

Ms Musa will need access to the money from her savings plan quite soon, so a cash account is the only sensible option. Three to four years is too short of a timescale for investment in the markets.

Mr Connolly says that Ms Musa should first use up her cash Isa allowances (£3,000 in this tax year) and then get a competitive deposit account for the rest. He recommends Marks & Spencer (4.5 per cent) or Abbey's postal Isa (4.6 per cent) for the tax-free funds and ING Direct (4.41 per cent) for the balance.

Ms Starkey suggests Intelligent Finance for the Isa (4.6 per cent), as a savings bank with consistently competitive rates. She sounds a note of caution about accounts that offer introductory bonuses: they pay more up front but might not be competitive after the bonus rate ends.

SHARES

Given that Ms Musa has no other equity investments, her Barclays shares (worth about £500 at the moment) represent a relatively high-risk investment. Mr Connolly suggests that if Ms Musa does want to keep some exposure to the markets, a collective investment such as a unit or investment trust would suit her better. If that is too much risk, then she should sell the shares and put the money into a deposit account.

Ms Starkey points out that selling through a flat fee dealing service is the cheapest way to realise the capital.

PENSION

Ms Anstee points out that Ms Musa is in a fortunate position as a member of the local government pension scheme. Ms Musa might even want to use some of the money from her savings plan to top up her local government pension, as this will build up her entitlement and provide a cushion, should she go freelance. Transferring the private pension will depend on whether the local government scheme will accept it; there might be exit penalties. Ms Starkey says that the pension is likely to be an old-style scheme with quite high charges. An alternative might be to change to a stakeholder plan.

Consolidating her public-sector pensions should be easier, and she can add her years of service from teaching to her current arrangements. As long as her current salary is higher than her teaching salary, this is worth considering,

COLLEGE FEES

If Ms Musa's son does go on to higher education, he will have to pay university fees (£3,000 a year under the Government's proposed top-up fees). If Ms Musa does move to a cheaper house this will free up funds, but in the meantime, Ms Starkey says it is important to save as much as possible.

MORTGAGE AND PROPERTY

Ms Anstee suggests that Ms Musa might want to review her mortgage arrangements to see if a better deal is on offer. But she cautions that there might be penalties on her current, fixed-rate loan. Those penalties, Ms Starkey says, could outweigh any savings.

Although moving house will free up capital, Ms Starkey has an alternative suggestion. If there is space in the house when her son moves out, Ms Musa could consider letting a room. Under the Government's Rent a Room scheme, the first £4,250 of annual rent is tax free.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Content Writer - Global Financial Services

    £25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Web Developer - PHP

    £35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

    Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

    £15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

    Recruitment Genius: Loan Underwriter

    £18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

    Day In a Page

    The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

    The Silk Roads that trace civilisation

    Long before the West rose to power, Asian pathways were connecting peoples and places
    House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

    The honours that shame Britain

    Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
    When it comes to street harassment, we need to talk about race

    'When it comes to street harassment, we need to talk about race'

    Why are black men living the stereotypes and why are we letting them get away with it?
    International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

    International Tap Festival comes to the UK

    Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
    War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

    Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

    Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
    Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

    'A subversive brothel keeper and Communist'

    Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
    Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

    BBC heads to the Californian coast

    The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
    Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

    Victorian fraudster who shook the Bank of England

    Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
    Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

    Car hacking scandal

    Security designed to stop thieves hot-wiring almost every modern motor has been cracked
    10 best placemats

    Take your seat: 10 best placemats

    Protect your table and dine in style with a bold new accessory
    Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

    Cook not the only one to be caught in The Oval mindwarp

    Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
    Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

    Can Benitez get the best out of Bale?

    Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
    Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

    Beijing witnesses new stage in the Jess and Kat rivalry

    The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
    Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

    Jeremy Corbyn interview: A shrewd operator desperate for power

    His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
    Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

    Isis executes Palmyra antiquities chief

    Robert Fisk on the defender of the ancient city's past who was killed for protecting its future